Someone has finally decided to change the way in which Stamp Duty Land Tax is worked. It’s been long overdue and at initial glance, especially with the headline rates saying 98% of buyers will be better off. More tax will be payable on high end property and less on mid and low range property; superb.
No longer do we have a fixed banding system. Eg. 3% tax on the entire amount of any property purchased between £250,000 and £500,000.
Let’s look at how this will effect property buyers in real terms.
If you’re buying at £125k or below, it will make nil difference as your tax liability will be zero.
Buying at £200,000 – You will be £500 better off!
Your stamp duty tax would have previously been 1% of the full amount so £2000.
With the new system you pay nil on £125k and 2% on the remainder (£75,000), so your liability will be £1500. A total saving of £500.
Buying at £300,000 – You will be £4000 better off!
Your previous tax liability would have been £9000 at 3% of the full amount.
New tax liability will be £0 < £125k = £0. then £2500 on the £125k to £250k and then 5% of the remaining £50k giving a total of £5000.
Buying at £520,000 – You will be £4800 better off!
Old system would have been 4% of the total amount leaving a £20,800 tax bill.
New system will be £2500 of the first £250k and then £13,500 on the remaining £270k giving a total bill of £16,000 so leaving you £4800 better off.
Summary
So now we’ve a progressive system, this will disband the grouping of property at the £125k, £250k and £500k brackets to allow for properties to frequently and easily be sold at £252k or £505k etc.
In summary I think it’s fair and been a very, very long time coming as the majority of people will be better off.
Simon Ward
Founder
